Hiltzik: The overprotesting Bill Ackman


There was a time, I must admit, when the hedge fund billionaire Bill Ackman was one of my Wall Street heroes.

It started in December 2012. Ackman had decided to take a short position in the shares of the multilevel marketing firm Herbalife.

Ackman justified his bet with a heroic 334-deck Power Point presentation laying out all the features of the Los Angeles company that he said made it indistinguishable from a scam: It marketed its nutritional supplements as unique products when they were actually commodity supplements sold at premium prices, he said. It was a pyramid scheme in disguise, and more.

Students are forced to withdraw for much less…Rewarding her with a highly paid faculty position sets a very bad precedent for academic integrity at Harvard.

— Bill Ackman attacks Claudine Gay for plagiarism, before his own wife was also accused

Some of Ackman’s points dovetailed with reporting by me and my colleagues at The Times — that its widely touted “affiliation” with UCLA was a penny-pinching attempt to gain reflected scientific credibility from the university’s reputation (to UCLA’s discredit) and that it exploited Latinos in its marketing, for example.

In short, I saw Ackman’s campaign as an effort to take down a company that needed taking down. That was the good side of Bill Ackman — willing to take a short position in a high-flying stock and back it up with solid research. Only someone with a lot of money and even more personal vanity seemed capable of this audacious approach.

As it happened, however, Ackman’s campaign also revealed the drawbacks of Ackmanism. He was so confident that government regulators would seize on his claims and bring the stock — then trading in the mid $40s — to zero, that he publicly disclosed that he had placed a $1-billion short bet against the company. (Short investments make money if the shares fall.)

His audacity brought Ackman haters out of the woodwork. Among those who harbored old gripes about Ackman was the storied investor Carl Icahn, who evidently (as I wrote) “relished the opportunity to put the squeeze on a short-seller who had been unwise enough to proclaim his vulnerable position to the world.” Icahn took the other side of the bet, propping up Herbalife’s price.

Ultimately, the company settled a Federal Trade Commission lawsuit by paying $200 million to 350,000 consumers who had been gulled by “Herbalife’s deceptive earnings claims” into signing on as Herbalife marketers. The company agreed to restructure its business.

That didn’t save Ackman, because the company survived. He disclosed in early 2018 that he finally had exited his short investment in Herbalife, taking a loss that some investment analysts estimated at the full $1 billion.

Obviously, Ackman’s mistake then was braggadocio. Had he kept his short bet quiet, he might have been able to ride Herbalife’s price decline down to a healthy profit. But he couldn’t resist boasting about how smart and audacious he was.

The same character flaw has been on display in Ackman’s latest crusade, which began as an ultimately successful effort to oust Claudine Gay as the president of Harvard. This effort necessarily had to be waged in public, since it was clear that only public pressure would force the hand of Gay and Harvard’s leadership.

Ackman began his crusade with complaints about Gay’s response to purported antisemitism on the Harvard campus and her flatfooted response to a tendentious question from right-wing Rep. Elise Stefanik (R-N.Y.) at a congressional hearing. After her resignation as president, Ackman latched onto accusations of plagiarism in some of Gay’s academic writing to assert that she should also be fired from the university’s faculty.

“Students are forced to withdraw for much less,” Ackman tweeted. “Rewarding her with a highly paid faculty position sets a very bad precedent for academic integrity at Harvard.”

That’s the public position that has come back to bite Ackman where it hurts the most. By pushing on the plagiarism accusations against Gay, Ackman opened the door to a broader inquiry into plagiarism in academia — specifically, in the work of his wife, Neri Oxman, a former professor at MIT.

The publication by Business Insider of allegedly plagiarized passages in Oxman’s work has set Ackman off on a delirious public snit against Business Insider and contortions about what is and isn’t plagiarism and what volume of it warrants professional extermination, all played out in extended tweets. The battle has led to further examination of Oxman’s work, which doesn’t always impress with its coherence .

A few other billionaires with ambitions of running the world have learned that they have a better chance of getting what they want out of life by remaining in the background. One is Peter Thiel, who privately and quietly bankrolled a privacy lawsuit brought by wrestler Hulk Hogan against the celebrity website Gawker.

Thiel’s role in backing Hogan’s lawsuit with a $10-million donation remained a secret until after a jury returned a $140-million judgment against Gawker. Would Gawker have lost if it could have made Thiel’s role public? Possibly not. By remaining behind the curtain, Thiel got what he wanted, which was effectively to put Gawker out of business.

Then there’s Elon Musk, who was able to bask in his public image as a brilliant engineer with the ability to solve global warming and advance the cause of space travel through his companies Tesla and SpaceX. That lasted until he bought Twitter and became the tweeter-in-chief, revealing himself as an unreconstructed right-wing antisemitic conspiracy monger.

The effect this revelation will have on Tesla’s electric vehicle sales and SpaceX’s role as a government contractor are still unclear, but they may not be good.

There’s more to this than a yarn about a billionaire hedge fund manager with terminal digital logorrhea. Ackman plainly never learned the lesson of the Streisand Effect, which describes how efforts to conceal or suppress information end up bringing that information even greater public attention.

(The term refers to an attempt by Barbra Streisand to have an aerial photo of her Malibu estate removed from a government mapping project; rather than secure her privacy, Steisand’s lawsuit turned the photo into a sensation on the internet, where it remains easily available.)

Ackman’s public conniptions on Twitter don’t make him, Oxman, MIT, or the MIT Media Lab, where Oxman used to be a professor, look good. And none of it would have happened if Ackman had kept his mouth shut.

That brings us to what has reemerged into public awareness as a result. Oxman’s reputation as a public intellectual, such as it was, doesn’t seem to have been enhanced by the more recent scrutiny of her work. Not that doubts about her output are entirely new: In 2018, Rachelle Hampton of Slate.com memorably, and accurately, described Oxman’s Twitter feed as “a stream of majestic gobbledygook.”

The Streisand Effect demonstrated its potency as recently as Monday, when Ackman posted a fantastically lengthy tweet responding to a report in Business Insider about Oxman’s dealings with the late sex trafficker Jeffrey Epstein, who had been a big contributor to the MIT Media Lab. Who knew? Today, plenty of people.

Ackman objected to Business Insider’s assertion that he “pressured” MIT in emails to keep Oxman’s name out of the developing Epstein scandal. (Business Insider attributed the “pressure” claim to the Boston Globe, but the Globe didn’t use that term and merely reported the emails.)

In his own defense, Ackman posted the key email in question and urged his Twitter followers to read it “carefully so you can see for yourself.”

Ackman must have been bluffing, on the assumption that no one would bother actually reading the email. Those who do will discover that it reads unmistakably as a threat to do damage to MIT’s reputation if Oxman’s name is mentioned in connection with the Epstein matter.

Here’s the money quote, from a message from Ackman to Joi Ito, then the Media Lab’s director:

“It is very important that you don’t mention Neri’s name or otherwise get her involved or she will have to issue her own statement to protect her reputation explaining why it was sent and at whose request, who else received similar gifts, how she met Epstein, who else at MIT received funding from Epstein…This will of course blow this up even more which we would certainly not like to see happen.”

Tell me that doesn’t remind you of that stock joke in which gangsters tell their target, “Nice place you got here. Be a shame if anything happened to it.”

This only resurrected the noisome history of Epstein and the Media Lab, which MIT surely hoped would be dead and buried after it issued an independent report on the matter in January 2020. The report says Ito “cultivated Epstein as a donor” even after Epstein’s 2008 conviction in Florida for soliciting minors for prostitution. Ito resigned from MIT in 2019.

Among the beneficiaries, according to the report, was Oxman, who met Epstein on campus in 2015 and received donations from him totaling $125,000 for her research (Ackman says it was $150,000). In 2017, she arranged to have a ceremonial resin “orb,” apparently a gewgaw given to donors and other honorees that she designed, delivered to Epstein. After their one meeting in 2015, Ackman says, Oxman “never accepted an invitation or saw or spoke to [Epstein] again.” The MIT report doesn’t state otherwise.

MIT can’t be happy that Ackman has turned the spotlight again on the Media Lab, which has regularly been criticized as an overblown hive of inflated egos with the skimpiest record of accomplishments to its name. Anyway, Oxman left MIT in 2021.

The greatest damage that Ackman’s tweets have done may be to the debate over academic plagiarism. Despite asserting that Gay’s plagiarism damaged Harvard’s reputation for “academic integrity,” he now argues that allegations of Oxman’s copying of passages and phrases from other sources — including even Wikipedia — without proper attribution amount only to trivial citation errors, not plagiarism at all.

He has threatened to sue Business Insider, which says its stories on the issue are “accurate and the facts well documented.” He also has threatened to do a scrub on the academic work of MIT’s hundreds of faculty members in search of plagiarism.

Is there any clarity to come out of this mudslinging? The answer is no — just more mud. And more noise … until Ackman learns to shut up.





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